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NAB's profit continues to fall

National Australia Bank's first-quarter profit has fallen by 20 per cent due to lower values on some of its assets.

NAB's unaudited net profit in the three months to December 31 was approximately $1.26 billion, it said on Thursday, down from $1.6 billion in the same period in the previous year.

The bank's unaudited cash earnings in the three months to December were about $1.45 billion, up from $1.4 billion in the same period the previous year.

The main reasons for the difference between profit and cash earnings were losses on fair value and hedging impacts, NAB said.

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Cash earnings rose due to a three per cent increase in revenue, thanks to an improved performance in wholesale banking, NAB said.

"This is a pleasing result, especially given operating conditions remain challenging both in Australia and the UK, notwithstanding recent improvements in financial markets," chief executive Cameron Clyne said in a statement.

NAB's profit in the year to September 30, 2012, fell by 22 per cent to $4.08 billion, due to massive costs associated with bad debts and restructure costs in its troubled UK businesses.

Restructuring of the core UK banking business was proceeding well, Mr Clyne said on Thursday, with costs lowered and its funding mix improved.

NAB's overall cost of bad debts was $554 million in the three months to December, a fall of 10 per cent.

But there was a rise in bad debts in its personal banking division, NAB said.

NAB's costs also rose, by four per cent, in the three months to December, due to wage increases and lower performance-based pay in the preceding months.

The bank's workforce fell by about 500 in the three months to December, largely due to the UK restructure, NAB said.